As markets await Eurozone GDP data and the BoE's Bailey speech, EUR/GBP weakens to around 0.8300

The EUR/GBP pair is showing a slightly negative trend, trading near 0.8310 during early Thursday's European session. The flash estimate of the Eurozone's Gross Domestic Product (GDP) for the third quarter (Q3) is set for release later in the day, along with speeches from Bank of England (BoE) Governor Andrew Bailey and European Central Bank (ECB) President Christine Lagarde.

The UK’s unemployment rate increased more than expected, rising to 4.3% for the three months ending in September, which has pressured the British Pound (GBP). According to XTB analysts, the higher unemployment rate might prompt markets to increase bets on a potential BoE rate cut next month.

Nonetheless, BoE Chief Economist Huw Pill remains cautious, noting that wage growth remains "quite sticky" and challenging to align with the UK's inflation target. Pill also remarked that while there has been notable disinflation in the UK economy, this has allowed for some easing in restrictive monetary policies.

Hawkish comments from the BoE could provide temporary support to the GBP. Market participants will closely follow Bailey’s speech later on Thursday for potential clues on the BoE’s interest rate policy outlook.

On the European front, ECB policymaker Olli Rehn stated on Tuesday that additional rate cuts are anticipated, with the deposit rate possibly reaching a neutral level in the first half of next year. The expectation that the ECB may reduce rates more aggressively than the BoE could weaken the Euro (EUR) in the near term.

Markets have priced in a 25 basis points (bps) rate cut, with nearly a 20% probability of a larger 50 bps move. Investors are keenly awaiting ECB President Christine Lagarde’s speech later on Thursday for further insights into the central bank’s policy stance.

 

 

 

 

 

 

 

 

 

Paraphrasing text from "FX Street" all rights reserved by the original author.